Commissioner Michel Barnier's remarks at the ECOFIN Council press conference

Today is a momentous day for banking union. A memorable day for Europe's financial sector.

Progress made in recent days on the Single Resolution Mechanism and a whole host of financial files is unprecedented.

We are introducing revolutionary changes to Europe's financial sector.

Finally learning all the lessons of the crisis.

Since the onset of the crisis in 2008, the Commission has been at the forefront of efforts to create a safer and sounder financial sector.

I have now delivered 28 proposals to better regulate, supervise, and govern the financial sector and a more integrated, less fragmented single market.

So that taxpayers no longer foot the bill when banks make mistakes. Ending the era of massive bail-outs.

And in the eurozone, for those countries which are more interdependent, creating the banking union to break the vicious circle between banks and their sovereigns. How? By centralising the delivery of EU-wide rules for the eurozone.

But these rules are not only about dealing with today's crisis and avoiding a future crisis.

They are also essential to create long-lasting financial stability: the pre-condition so banks can lend to the real economy. To consolidate the economic recovery. For sustainable jobs and growth.

Most of these rules are either now already in force or in the final stages of negotiation between the Council and the European Parliament. Tremendous progress has been made in the last few days.

Let me recap:

1. Trilogue agreement on bank recovery and resolution: A tool box to better prevent and manage a bank crisis in all 28 Member States. Moving from bail-outs to bail-in. Allowing the orderly winding down of banks with minimum recourse to taxpayers.

2. Trilogue agreement last night on deposit guarantee schemes: every saver should now be fully reassured that in case their banks fails, all deposits under 100 000 euro are guaranteed. Everywhere in Europe. And the schemes will be partly pre-funded and payments made faster.

3. A Council general approach a few moments ago on the single resolution mechanism: the SRM implements the BRRD in the banking union. Consistent decisions for the resolution of banks and common resolution financing arrangements. The Commission does not agree on every point in the general approach, but real progress has been made in very little time. Many of you are asking if I am disappointed that the Commission is no longer the trigger. I am not. I always made clear the trigger should be a European institution but I was open as to which one. I said so again last week when I explained the hybrid system being created was too complex. In many ways today's agreement is actually better than last week's texts. And the text is a good basis to start negotiations with the European Parliament. After agreement on the Single Supervisory Mechanism, the first leg of the banking union, final agreement on the SRM will complete the banking union.

Together, these laws will ensure we have a comprehensive framework for dealing with bank crises.

4. On top of all these issues, work has progressed to make the financial sector as a whole safer. Europe continues to be at the forefront of its implementation of G20 commitments:

improving the quality of audits, thanks to the trilogue agreement Tuesday morning. More transparency, more competition, fewer conflicts of interests.

improving settlement, thanks to the trilogue agreement earlier today on central securities depositories (CSDs): making securities markets safer and more efficient, and important for the financing of the real economy.

But we are not at the end of the road. In particular on the SRM. Far from it.

Negotiations will now start with the European Parliament in the New Year. The ECON Committee adopted its position yesterday thanks to the hard work of rapporteur Elisa Ferreira.

Both sides are committed to banking union. So compromise is possible.

But it is also true both sides are far apart on some key points. Flexibility will be needed on both sides to reach an agreement before the Easter break.

We can't afford to fail. Citizens would not forgive us if another crisis hit and we remained unprepared.

BACKGROUND

Key elements of the General Approach:

The SRM Regulation builds on the Rulebook on bank resolution set out in the BRRD and establishes the following:

Scope: The SRM would apply to all banks supervised by the SSM. The Board would prepare resolution plans for all banks directly supervised by the ECB and for cross-border banks. National resolution authorities would assist the Board and prepare resolution plans for all other banks. At the time of resolution the Board would decide for all banks if resolution involved use of the fund.

Fund: A Single Resolution Fund pooled at European level from all the banks in the participating Member States. The Fund would be owned and administrated by the Board. The Single Fund would reach a target level of 1% of covered deposits over a 10 year period. During this transitional period, the Single Fund, established by the SRM Regulation, would consist of national compartments corresponding to each participating Member State. Those compartments would cease to exist at the end of the transitional period following their progressive mutualisation. The establishment of the Single Fund and its national compartments and the decision-making on its use would be regulated by the Regulation, while the transfer of national funds towards the Single Fund and the activation of the mutualisation of the national compartments would be provided for in an inter-governmental agreement to be established among the participating Member States in the SRM. Those Member States would endeavour in the inter-governmental agreement to finalise the negotiations by 1 March 2014.

Decision making: Centralised decision-making built around a strong Single Resolution Board (the 'Board') and involving the Commission, the Council, the ECB and the national resolution authorities. The ECB notifies that a bank is failing to the Board, the Commission, and the relevant national resolution authorities and ministries. The Board assesses whether there is a systemic threat and any private sector solution. If not, it adopts a resolution scheme including the relevant resolution tools and the use of the Fund. The Council can object to the resolution scheme on a proposal from the Commission or can ask the board to amend it The resolution scheme is then implemented by the national resolution authorities. If resolution entails State aid, the Commission has to approve the aid prior to the adoption by the Board of the resolution scheme.

Governance of the Board / voting modalities: In its plenary session, the Board would take all decisions of a general nature and the decisions which involve the use of the Single Resolution Fund above a certain threshold. In its executive session, the Board would take decisions in respect of individual entities or banking groups. The composition of the executive session of the Board includes the Executive Director, four other permanent members, while the Commission and the ECB would be permanent observers. In addition, to ensure that the interests of all Member States on which the resolution had an impact were considered, further members would be part of that session according to the institution that was being resolved. None of the participants in the deliberation would have a veto. However in view of the sovereignty of Member States to decide on the use of national budgets, the SRM could not require Member States to provide extraordinary public support to any entity under resolution.

Backstops: A statement on the backstops to the Single Resolution Fund and its national compartments accompanies the General Approach together with a Decision of the representatives of the euro area Member States committing to establish among themselves an inter-governmental agreement specifying the channelling of the funds (bank contributions raised at national level by each participating Member State) to the Single Resolution Fund and the activation of the progressive mutualisation of the use of such funds during the transitional period.